S&P500 Index Current Trading Signal

⇓⇓ Strong Sell

We use RRG® graphs to show the relative strength and momentum of a group of liquidity benchmarks versus broad-based USA stock indexes. When the liquidity benchmarks show strong relative strength and momentum they appear in the green Leading quadrant. This means liquidity conditions are favorable for establishing and holding long equity positions. As the relative momentum of the liquidity benchmarks fades, they start moving into the yellow Weakening quadrant. If relative strength also then fades, they move into the red Lagging quadrant, which means that liquidity conditions are now unfavorable for holding long equity positions, and stocks should be sold or even shorted. Finally, when momentum starts to pick up again, meaning liquidity conditions are improving, they shift back into the blue Improving quadrant.

The liquidity benchmarks we use are the Hang Seng Index in Hong Kong, an excellent benchmark for global liquidity conditions, HYG, a high yield bond ETF, TLT, a 20+ Year US Treasury Bond ETF, and the commodity Copper, an excellent barometer of global industrial economic activity. Each of these provides deep insight into current liquidity conditions in the stock market.